FOREIGN DIRECT INVESTMENTS AND ECONOMIC GROWTHOF THE REPUBLIC OF SRPSKA: SPILLOVER EFFECT

Abstract

This paper examines the influence of foreign direct investments on the economic growth of theRepublic of Srpska. The goal of the research is to show the scientific and professional public themechanism of foreign direct investments in the function of growth and development, as well as the impacton targeted macroeconomic indicators. The research was conducted by analysing the relevant literature,using the deduction method and quantitatively calculating the impact of foreign direct investments on theeconomic growth of the Republic of Srpska. Theoretical and empirical analysis aimed to provide ananswer to the research problem, which is sublimated by the question: Do foreign direct investments havean impact on the economic growth of the Republic of Srpska? The research results showed that there is noconsistent connection and determination of the dependent variable with the variations of the independentresearch variable. That is, the cumulative value of the inflow of foreign direct investments didn’t generatea statistically significant impact on macroeconomic indicators of economic growth. In this way, thehypothesis that foreign direct investments, due to the unfavourable sectorial structure of investments, donot have a significant impact on the economic growth of the Republic of Srpska was confirmed. Thecontribution of the research is reflected in the choice of the analytical framework of the research and theobtained research results as a guideline for the creators of economic policies in the Republic of Srpska, interms of factors that have a (de)stimulating influence on economic growth.